Twenty years on, is Nick Leeson really sorry for breaking the bank? - Telegraph Banks and Finance Twenty years on, is Nick Leeson really sorry for breaking the bank? Nick Leeson was the original rogue trader, bringing down Britain's oldest bank, Barings, and going on the run. Twenty years on, his actions are hard to forgive, say some who remember him Nick Leeson on his release from jail in Singapore in 1999 Photo: MURRAY/Rex Features Follow In the mid-1990s, urgent messages were sent by fax. And almost exactly 20 years ago one landed in the London office of Peter Baring, the chairman of Barings Bank, from a junior colleague based in Singapore. It was sent by Nick Leeson, who said he was ill and wanted to resign. It was the last of a long string of lies he had told to his bosses. He wasn’t ill. He was on the run, holed up in a luxury hotel in Malaysia, after racking up an astonishing £832 million of losses. The fax was sent on February 23.

By February 26th administrators had been called in to manage the collapse of Britain’s oldest merchant bank, which had been trading continuously since 1762 – one of the greatest names in the City wiped out by one “rogue trader”. Twenty years on, the name Nick Leeson and Barings still resonates, even for those that have lived through the run at Northern Rock, the collapse of Lehman Brothers and numerous banking scandals that have incurred losses of far greater magnitude. In part, it was the drama of a man in hiding – captured and exaggerated (but only slightly) by a Hollywood film starring Ewan McGregor. In part, it was the staggering ignorance of Leeson’s bosses, who were clueless there was a vast black hole hidden in their accounts. Related Articles The fall of Barings: a collapse that made nothing improbable 23 Feb 2015 But mostly, it was the character of Leeson himself, not a master criminal, but a 28-year-old in a backwards baseball cap, a D in A-level Maths, a pretty wife, and an remarkable ability to hide a secret. Nicholas Edwards worked as a senior investment banker in the London office of Barings.

He remembers meeting Leeson in Singapore: “He was an ordinary fellow, from an ordinary background, doing an ordinary job.” Stephen Pollard was his lawyer, who represented him for many years. “I remember reading all the press cuttings on the way out to Frankfurt [where he was finally arrested] when I was due to meet him for the first time, and I remember thinking am I going to meet an arch-villain or some sort of spiv? And I just met a very quiet, calm and straightforward boy from Watford.” In the frenetic week while he was on the run, and failed attempts were made to shore up the bank, wild rumours circulated that he must have had an accomplice, and that there was bound to be have salted away millions of pounds. But neither proved correct. His crime started back in 1992, soon after he was sent to Singapore by Barings, as an up and coming trader to run the derivatives trading desk. He maintains initially he was covering up for a junior colleague who lost £20,000 on the trading floor one day. Leeson set up the error account 88888 to hide the bad trade, but then he started using it himself.

Any bad trade he could hide in this account, which bizarrely was never checked by a compliance officer or senior management, mostly because Leeson was in charge of the Singapore back office himself. He was mostly trading futures on the Nikkei 250, the main Tokyo index, on behalf of clients. In theory most his business should have been “cash neutral”; if money was made or lost it would have been client money – Barings was just meant to be taking a commission. Only a small amount of the trades were meant to be proprietary – on behalf of the bank itself. But Leeson was using the bank’s money to bet on the market, hoping that he would eventually claw back the losses in the 88888 account and no one would be any the wiser. Dominic Lindley, a financial markets consultant, says: “Barings should have worked out something was out of the ordinary, because he was requesting vast funding to be transferred to Singapore.

But they wanted to believe they had found a magic money making machine.” Leeson, as portrayed by Ewan McGregor in the 1999 film Rogue Trader When Leeson’s office desk was broken into after he went on the run, his bosses found a pot of glue, scissors, and various blank headed letters – which he had used to fraudulently authorise some of his trades. Part of his deception involved little more than cutting and pasting people’s signatures on letters and faxing them through to head office. Pollard says: “Nick made the fundamental error – when you are in a hole, you need to remember when to stop digging.” By Christmas 1994, Leeson was sitting on losses of £280 million – catastrophic but not fatal for the bank, which had about £350 million to its name. But then the Kobe earthquake hit and the Nikkei, which he was betting would recover, slumped. The game was up. “I was 25-years-old when I was working in Singapore and I should have turned around and asked for help and advice. And I didn’t. It was my biggest regret,” Leeson said a couple of years ago.

If this sounds like the product of many hours’ therapy, it is perhaps not surprising: he gained a psychology degree on his release as a way of coming to terms with the catalogue of disasters that befell him in the country’s harsh Tanah Merah prison. He even wrote a book many years later “Back from the Brink: Coping with Stress”, which took the form of conversations with a psychologist. A more recent book he has written about debt combines a personal finance manual with childhood recollections of his family being continually in debt and cheating the coin-operated rental television. The first blow was when Lisa left him, despite sticking by him initially and dutifully visiting him in jail – even taking out sheets she had slept in so he could smell her scent. “I realised I could never, after his deception, love him again” she told an interviewer a decade ago. She was also terribly wounded that in his book he talked about her miscarriage. She married another banker, Keith Horlock, has two children and lives a quiet life in Kent. To make matters worse, while in jail, Leeson was diagnosed with colon cancer. He was offered treatment, but only if he agreed to being handcuffed to his bed.

He refused – and called the prison authorities’ bluff, saying he would prefer to die in jail. He was treated, without restraint. Pollard says: “He had a hard upbringing, so he was physically tough and could look after himself. He was also quite mentally strong.” Leeson, pictured in 2011 On his release, liquidators from the bank served him with a bill for £100 million and he was only allowed to earn a modest monthly living allowance. He did this by delivering after dinner speeches, for which he was paid handsomely, often £6,000 a pop. Initially, the liquidators took a cut, but after five years they finally gave up. The last 12 year or so have been good to him. He married an Irish beautician Leona Tormay and moved to Ireland; he got a job at Galway United football club, where he rose to be chief executive. He resigned in 2011, after the club struggled, and now works for a debt advisory company but still gives speeches – he is appearing at next week’s Nottingham Business Expo. He had a son with Leona, despite believing the cancer treatment would make children impossible.

Leeson was always very clear that the losses he incurred were his fault, but he claimed he failed to realise the cataclysmic effect they would have. “Not once did I consider the bank would collapse. I don’t think I knew what the bank was worth,” he has said. Many of his former colleagues are less forgiving. Edwards met him three years ago for a BBC radio programme, The Reunion . “I was rather struck by his lack of remorse. He was resolute – yes, he was sorry it had happened but it was very matter of fact. He seemed to blame the system, as supposed to the fact that he is a ruthless, unscrupulous cheat and liar. That’s what it boils down to.” Edwards finds it hard to accept Leeson's tale of redemption. “I do think it is wrong that Nick is able to earn a living from his notoriety. If he wants to earn a living stacking shelves at Tesco, that’s absolutely fine.

But I do have a problem with someone paying him a handsome fee talking about how he brought down Barings.” Twenty years ago, rogue trader Nick Leeson brought down Barings Bank | Business | The Guardian Share on Messenger Close In his autobiography Rogue Trader, Nick Leeson said the ethos at Barings was simple: ‘We were all driven to make profits, profits, and more profits ... I was the rising star.’ Leeson did make Barings vast sums. In 1993, he made £10m - 10% of the bank’s profits for that year. But in 1995, the discovery of a secret file - Error Account 88888 - showed that Leeson had gambled away £827m in Barings’s name. The City’s oldest merchant bank was finished . Founded in 1762, British merchant bank Barings held an account belonging to the Queen. The Guardian 27 February 1995 As stock markets took fright from the biggest financial scandal in years, Watford born Leeson fled the firm’s Singapore office leaving a note saying ‘I’m sorry’. He then went on the run.

In his absence, a mixed picture emerged of the 28-year-old whose golden touch in the currency market earned him £200,000 a year. Some colleagues said he was ‘brilliant’ and the ‘most confident trader in town’ . Others said he was a ‘high-flyer who liked to dabble in dare-devil trades.’ The Guardian, 28 February 1995. With a global manhunt underway, Leeson surprised everyone by turning up at Frankfurt airport several days later. He then began a nine month battle to avoid extradition to Singapore, which failed. Almost a year after fleeing Singapore, Leeson landed at Changi airport escorted by security. Wearing gym gear and a baseball cap turned back to front, he looked relaxed. He was charged with forgery and fraud in relation to the collapse of Barings. Nick Leeson arrives in Singapore, 23 November 1995. At his trial at Singapore District Court, Leeson, who had been held at Tanah Merah maximum security prison, admitted charges of forgery and cheating.

Presumably in an attempt to play the sympathy card, his lawyer told the court that Leeson had said his wife had suffered a miscarriage and that Leeson was financially ruined. Unmoved, the judge sentenced Leeson to 6 ½ years in prison. The Guardian, 2 December 1995. The risk of a longer prison sentence put Leeson off appealing, instead he served four years in a Singapore jail. During his spell in prison he was diagnosed with colon cancer for which he received treatment. In 1999, Leeson was freed and enjoyed champagne and smoked salmon on the flight back to London with British journalists. Such was the interest in Leeson’s remarkable story the Sunday Mirror reported that he had made £200,000 from a book deal and a newspaper serialisation. He also received a share of the £7m profit from the film Rogue Trader, which stared Ewan McGregor and Anna Friel. Pinterest Rogue Trader trailer, 1999. As for Barings, it become part of ING, the Dutch bank paying £1.00 for it in 1995. Many of Leeson’s former colleagues lost their jobs. Barings’s investors also lost out.

Their misery was compounded on hearing that the bank’s directors would still be getting large bonuses. A few months later, the chancellor, Kenneth Clarke, having already said that the banking regulatory system would be ‘thoroughly’ reviewed, presented an eagerly awaited Bank of England report to the Commons. The report, as expected, said that Barings’s fall ‘came from unauthorised and concealed trading positions,’ and ‘serious problems of controls and management failings within the Barings group.’ Nick Leeson & the Collapse of Barings Bank | Nick Leeson & the Collapse of Barings Bank By Jesse Colombo (This article was written on March 15th, 2005) In February of 1995, one man single-handedly bankrupted the bank that financed the Napoleonic Wars, Louisiana Purchase and the Erie Canal. Founded in 1762, Barings Bank was Britain’s oldest merchant bank and Queen Elizabeth’s personal bank. Once a behemoth in the banking industry, Barings was brought to its knees by a rogue trader in a Singapore office.

The trader, Nick Leeson, was employed by Barings to profit from low risk arbitrage opportunities between derivatives contracts on the Singapore Mercantile Exchange and Japan’s Osaka Exchange. A scandal ensued when Leeson left a $1.4 billion hole in Barings’ balance sheet due to his unauthorized derivatives speculation, causing the 233-year-old bank’s demise. How Nick Leeson Became Barings Bank’s Superstar Nick Leeson grew up in London’s Watford suburb and worked for Morgan Stanley after graduating from university. Shortly after, Leeson joined Barings and was transferred to Jakarta, Indonesia to sort through a back-office mess involving £100 million of share certificates. Nick Leeson enhanced his reputation within Barings when he successfully rectified the situation in 10 months (Risk Glossary). In 1992, after his initial success, Nick Leeson was transferred to Barings Securities in Singapore and was promoted to general manager, with the authority to hire traders and back office staff. Leeson’s experience with trading was limited, but he took an exam that qualified him to trade on the Singapore Mercantile Exchange (SIMEX) alongside his traders.

According to Risk Glossary: “Leeson and his traders had authority to perform two types of trading: 1. Transacting futures and options orders for clients or for other firms within the Barings organization, and 2. Arbitraging price differences between Nikkei futures traded on the SIMEX and Japan’s Osaka exchange. Arbitrage is an inherently low risk strategy and was intended for Leeson and his team to garner a series of small profits, rather than spectacular gains.” As a general manager, Nick Leeson oversaw both trading and back office functions, eliminating the necessary checks and balances usually found within trading organizations. In addition, Barings’ senior management came from a merchant banking background, causing them to underestimate the risks involved with trading, while not providing any individual who was directly responsible for monitoring Leeson’s trading activities (eRisk). Aided by his lack of supervision, the 28-year-old Nick Leeson promptly started unauthorized speculation in Nikkei 225 stock index futures and Japanese government bonds (Risk Glossary). These trades were outright trades or directional bets on the market.

This highly leveraged strategy can provide fantastic gains or utterly devastating losses – a stark contrast to the relatively conservative arbitrage trading that Barings had intended for Leeson to pursue. How Nick Leeson Caused the Failure of Barings Bank Nick Leeson opened a secret trading account that was numbered “88888” to facilitate his surreptitious trading. Risk Glossary says of Leeson: He lost money from the beginning. Increasing his bets only made him lose more money. By the end of 1992, the 88888 account was under water by about GBP 2MM. A year later, this had mushroomed to GBP 23MM. By the end of 1994, Leeson’s 88888 account had lost a total of GBP 208MM. Barings management remained blithely unaware. As a trader, Leeson had extremely bad luck. By mid February 1995, he had accumulated an enormous position—half the open interest in the Nikkei future and 85% of the open interest in the JGB [Japanese Government Bond] future. The market was aware of this and probably traded against him.

Prior to 1995, however, he just made consistently bad bets. The fact that he was so unlucky shouldn’t be too much of a surprise. If he hadn’t been so misfortunate, we probably wouldn’t have ever heard of him. Betting on the recovery of the Japanese stock market, Nick Leeson suffered monumental losses as the market continued its descent. In January 1995, a powerful earthquake shook Japan, dropping the Nikkei 1000 points while pulling Barings even further into the red. As an inexperienced trader, Leeson frantically purchased even more Nikkei futures contracts in hopes of winning back the money that he had already lost. Most successful traders, however, are quick to admit their mistakes and cut their losing trades. Surprisingly, Nick Leeson effectively managed to avert suspicion from senior management through his sly use of account number 88888 for hiding losses, while he posted profits in other trading accounts. In 1994, Leeson fabricated £28.55 million in false profits, securing his reputation as a star trader and gaining bonuses for Barings’ employees (Risk Glossary).

Despite the staggering secret losses, Leeson lived the life of a high roller, complete with a $9,000 per month apartment and earning a bonus of £130,000 on his salary of £50,000, according to “How Leeson Broke the Bank.” The horrific losses accrued by Nick Leeson were due to his financial gambling as he placed his trades based upon his emotions rather than through taking calculated risks. After the collapse of Barings, a worldwide outrage ensued, decrying the use of derivatives. The truth, however, is that derivatives are only as dangerous as the Nick Leeson was placed on trial in Singapore and was convicted of fraud. He was sentenced to six and a half years in a Singaporean prison, where he contracted cancer (Risk Glossary). He survived his cancer, and, while imprisoned, wrote an autobiography called “Rogue Trader,” detailing his role in the Barings scandal. “Rogue Trader” was eventually made into a movie of the same name. Nick Leeson was released from prison in July 1999 for good behavior.

Other Barings Bank Collapse & Nick Leeson Resources: Nick Leeson - Official Website Photo by David Cantwell ( Welcome to the official website of Nick Leeson – the original Rogue Trader whose unchecked risk-taking caused the biggest financial scandal of the 20th century. The collapse of Barings – personal bank to HM The Queen – in 1995 and Nick Leeson's role in it, is one of the most spectacular debacles in modern financial history. How could one trader bring down the banking empire that had funded the Napoleonic Wars? Curiosity, intrigue and sympathy have been the various reactions to this man's incredible life story. Following Barings' collapse, Nick Leeson was sentenced to six and half years in a gang-ridden Singaporean jail, in conditions that defy belief, while at the same time, his wife left him and he was diagnosed with colon cancer. Against all odds, Nick Leeson survived and now fully recovered from cancer, lives happily in Ireland with second wife Leona and three children. In 2006 Nick was appointed CEO of Galway United FC.

Having stepped down as CEO in January 2011, Nick Leeson continues to be in-demand around the world for conference and after-dinner speaking. BBC News | The Economy | How Leeson broke the bank Tuesday, June 22, 1999 Published at 15:58 GMT 16:58 UK Business: The Economy How Leeson broke the bank Nick Leeson guessed he faced jail when he was extradited to Singapore It was the 1980s. Traders were young and greed was good. Nick Leeson, a working class lad from Watford, the son of a plasterer, was chuffed to land a job in the purportedly-glamorous world of the City of London in 1982. It was a relatively low-grade job, but he quickly made a name for himself. He worked his way up, becoming a whiz-kid in the hardworking atmosphere of the far eastern currency markets. The Barings trader - when he was a schoolboy Soon, he was Barings Bank's star Singapore trader, bringing substantial profits from the Singapore International Monetary Exchange.

By 1993, a year after his arrival in Asia, Leeson had made more than �10m - about 10% of Barings's total profit for that year. In his autobiography Rogue Trader, Leeson said the ethos at Barings was simple: "We were all driven to make profits, profits, and more profits ... I was the rising star." He and his wife Lisa enjoyed a life of luxury that the money brought. He earned a bonus of �130,000 on his salary of �50,000. Deeper and deeper But in 1994, his luck began to run out when the markets turned against him, the downturn accelerated by the economic impact of the earthquake in Kobe, Japan. By autumn that year, the losses stood at �208m. Leeson requested and obtained extra funds to continue his trading activities, as he attempted to extricate himself from the financial mess by more and more frenetic deals. Lisa Leeson remarried after the relationship ended Alerted by the requests, his bosses carried out a spot audit in February 1995.

They discovered that losses amounted to more than �800m, almost the entire assets of the bank. Barings faced collapse. Leeson had hidden the losses in an obscure account called Error Account 88888, which went to different managers from the house accounts. When he was discovered, Leeson and his wife went on the run, first to Borneo, then to Frankfurt, but he was arrested and then extradited from Germany back to Singapore. Disaster for life and bank Barings, the UK's oldest merchant bank, finally crashed and was bought for �1, by the Dutch banking and insurance group ING. Dozens of executives who were implicated in the failure to control Leeson resigned or were sacked. Leeson pleaded guilty to fraud and was sentenced to six and a half years in prison. During his detention, he was diagnosed as suffering from colon cancer and had surgery last autumn. His marriage broke down and Lisa remarried. After his conviction, Leeson wrote Rogue Trader, in which he condemned the practices that allowed him to gamble with such large amounts of money unchecked. Who are the worst rogue traders in history? | Business | The Guardian Banking Who are the worst rogue traders in history?

From Jérôme Kerviel of Société Générale to Nick Leeson of Barings, we look at how unauthorised trading has cost major banks billions Rogue trader Jérôme Kerviel was found guilty and sentenced to three years in prison. Photograph: Joel Saget/AFP/Getty Images Share on Messenger Close That may be enough to ensure UBS makes a loss for its third quarter, the bank said, but it will not top the list of the worst rogue traders in banking history. That title belongs to Jérôme Kerviel, who lost Société Générale a staggering £3.7bn in 2008. Société Générale – £3.7bn SocGen revealed in January 2008 that a rogue trader had lost the bank £3.7bn. The trader was swiftly named as Jérôme Kerviel, then 31 years old, who had been taking unauthorised positions on stock futures, the bank said. A subsequent court case suggested Kerviel had been betting €50bn of the bank's money on the trades. Kerviel said that the bank had turned a blind eye when his trades were turning a profit.

Kerviel had worked in compliance, and bank bosses suggested he was adept at hiding his losses and bypassing checks. Kerviel was sentenced to three years in jail in October of last year , and told he must repay the money lost, a conviction which is currently subject to appeal. Coming in the midst of the banking crisis, the losses had surprisingly little impact on the market generally, with US losses from sub-prime mortgage lending dwarfing Kerviel's activities. Barings Bank – £827m The most famous 'rogue trader' in history, Nick Leeson brought down one of the grandest names in British banking . Working in Barings' Singapore office, Leeson initially made large profits for the bank by dealing in derivatives and futures. But after running up losses, he hid his bad trades in a single account in 1992. These losses grew over several years, forcing him into a series of increasingly desperate but unsuccessful attempts to make the money back. Leeson finally fled in February 1995 after a bet that the Tokyo stock market would rise went badly wrong. Once the full scale of the losses became apparent, Barings was sold to Dutch bank ING for just £1.

In the aftermath, Leeson's managers were criticised for giving him too much leeway. Crucially, he had been allowed to settle his own trades, letting him disguise his actions. In December 1995 Leeson was sentenced to six years imprisonment in Singapore, and was released in 1999. He subsequently ran Irish football club Galway United, and is now an after-dinner and conference speaker. Allied Irish Bank – £697m Friends and colleagues saw John Rusnak as a typical 'Mr Middle America', but the Baltimore-based trader was jailed after hiding trading losses of almost $700m (£355m) . He was hired by Allfirst Financial, a division of Allied Irish Bank, in the mid-90s as a dealer on the foreign exchanges. Betting mainly on the Japanese yen, Rusnak used fictitious options contracts to hide his losses over several years. Some outsiders suspected that all was not well, with Goldman Sachs reportedly refusing to do business with Rusnak. But it took until 2002 before routine checks finally uncovered the true nature of the bank's exposure.

By that stage, rather than sticking to his trading limit of $2.5m, Rusnak had secretly bet $7.5bn of AIB's money on the yen rising against the dollar. At his subsequent trial, prosecutors said he had created a false identity under the name David Russell and used an address in New York to send confirmations of false trades. Rusnak was jailed for seven-and-a-half years in a plea bargaining deal. Daiwa Bank – $1.1bn The president of Japan's Daiwa Bank received a particularly nasty shock on 13 July 1995 . Toshihide Iguchi, one of its senior US executives, confessed in a 30-page letter that he had lost $1.1bn through unauthorised bond trading. Like Leeson and Rusnak, Iguchi ran up the losses over several years. Having risen from the back offices to become a trader in 1984, a lack of segregation within his division meant he could hide his losses from his superiors while he tried, and failed, to trade back to profit.

Following his confession, it emerged that he had conducted the cover-up for over a decade, falsifying some 30,000 trading slips. Having once been seen as the golden boy of the department, in 1996 he was jailed for four years and fined $2.6m. In court, he told the judge that his life was filled with guilt, fear and deception after 11 years trying to recover his losses. Interviewed in jail, Iguchi said he had seen his earlier actions as merely a violation of internal rules. "I think all traders have a tendency to fall into the same trap. You always have a way of recovering the loss", he told Time magazine. Daiwa was also penalised heavily. The Federal Reserve ordered it to end all of its operations in America, leading to a sale of most of its US assets in January 2006. Sumitomo Corporation – $2.6bn Yasuo Hamanaka was jailed for eight years for fraud and forgery in 1997 after the one-time king of the copper market was found to have conducted rogue trading and fraud for more than a decade .

At the height of his power, Hamanaka was said to control 5% of the global copper market. His off-the-book trades forced prices up and generated large profits for years, but ultimately cost Sumitomo $2.6bn when the scandal was uncovered. A year after his conviction, Sumitomo paid about $150m to settle claims from British and US regulators. In 1999, Merrill Lynch was fined a total of £16m for helping to finance a copper trading scandal. The London Metal Exchange said it had provided the finance to clients to undertake actions that it should have known was the basis of an attempt to manipulate the market Other major trading losses Although actual fraud is rare, many other traders have run up huge losses simply through a bad call on the markets. These include Brian Hunter, an energy trader at hedge fund Amaranth. He had made large profits by speculating on natural gas prices, but ended up losing $6.6bn in 2006 after betting that the price of gas would rise. Unfortunately for him (but not for traders who took the opposite view), they plunged after a heatwave helped to slash the price of gas future contracts.

And Morgan Stanley's oil trader David Redmond risked $10m in a frantic series of trades following a drink-fuelled lunch. Redmond managed to recover most of the losses the next day, but was still banned from the City.

Former trader who lost Sociéte Générale £4.9bn released by appeal court after serving 110 days of five-year prison sentence Published: 4 Sep 2014 Trader faces charges including dishonestly falsifying a record of an exchange traded fund and false accounting, and is remanded in custody until next Thursday Published: 16 Sep 2011 UBS is expected to scale back its investment banking business as it races to protect its reputation following the arrest of one-time star trader Kweku Adoboli Published: 16 Sep 2011 Kerviel had threatened to remain in Italy in defiance of a deadline to return to France Published: 18 May 2014 Nick Leeson - Former rogue trader, and finance specialist Nick Leeson Former Rogue Trader and Finance Specialist Country: Ireland Despite more audacious and larger scale incidents of rogue trading since the collapse of Barings in 1995, Nick Leeson remains the most infamous rogue trader and one of the world’s most sought-after speakers within the financial sector. Curiosity, intrigue and sympathy have been the various reactions to this man’s incredible life story.

NON-Binding Request It is easy to send us a request and we will get back to you soon with information on fee and availability. This request is completely non-binding Speaker This field is for validation purposes and should be left unchanged. The rogue trader whose unchecked risk-taking caused the biggest financial scandal of the 20th century The collapse of Barings in 1995, and Nick Leeson’s role in it, is one of the most spectacular debacles in modern financial history. How could one trader bring down the banking empire that had funded the Napoleonic Wars? Nick Leeson, the young gambler who found himself sucked into a terrifying spiral of loss was a working-class boy who lived high in an upper-class world until his unchecked gambling caused the downfall of Barings Bank (personal bank to HM The Queen) and chaos in the Singaporean money market. Markets have always been cruel, but rarely have they been so cruel so swiftly – and on such a grand scale. Curiosity, intrigue and sympathy have been the various reactions to this man’s incredible life story.

Following Barings’ collapse, Nick Leeson was sentenced to six and half years in a gang-ridden Singaporean jail, in conditions that defy belief, while at the same time, his wife left him and he was diagnosed with colon cancer. Against all odds, he survived and now fully recovered from cancer, lives happily in Ireland with second wife Leona and three children. Nick Leeson is now one of the UK’s most sought-after speakers. Nick talks frankly about what happened with Barings, the lack of accounting safeguards, his capture and confinement for 9 months in a Frankfurt prison and being sentenced to 6 years by the Singapore court for forgery and cheating. Nick speaks regularly at conferences and corporate dinners and has travelled extensively to New Zealand and South Africa in the process. The evening usually comprises of a speech lasting up to half an hour and then a question and answer session that can be tailored to your requirements. He also addresses university campuses and has spoken at the Oxford Union, Trinity College Dublin and the University College Cork. In the aftermath of the AIB trading scandal in New York, and the collapse of Enron and Worldcom, Nick provides a fascinating insight into the continuing failures of senior and middle management at large corporations who still fail to protect shareholders and customers.

He also talks about being diagnosed with cancer and his fight against it. This type of evening represents a unique opportunity for people to meet and question the main participant in arguably the largest banking scandal that the world has witnessed. The story also has a number of human interest aspects that will astound any audience so is not restricted to the world of suits and power lunches that he used to frequent. NON-Binding Request It is easy to send us a request and we will get back to you soon with information on fee and availability. This request is completely non-binding Speaker WHERE WILL THE EVENT TAKE PLACE? Your Name* Interview: Nick Leeson | Southeast Asia Globe The man who broke the bank: Nick Leeson By: Daniel Besant - POSTED ON: July 6, 2015 In early 1995, Nick Leeson, a Singapore-based trader, single-handedly brought down one of the world’s biggest banks. Twenty years later, he shares his story of loss and redemption with Southeast Asia Globe February 26 is a relatively unremarkable day in history. No dictators were deposed, no countries gained independence and no bloody wars ended.

But this was the day, a little more than 20 years ago, that the actions of one young man in an office in Singapore brought Barings Bank, the second-oldest in the world, crashing down. That man was 27-year-old British derivatives trader Nick Leeson. Out in the open: Nick Leeson stands on the shore of Galway Bay. Photo: Reuters/Paul McErlane “I loved every day that I worked in the industry, apart from when it started to go wrong,” says Leeson, who was played by Ewan McGregor when his story was told in the 1999 movie Rogue Trader. “It’s exciting, it’s challenging, it’s everything that I wanted in a job.” Three days before that fateful day in 1995, Leeson had gone on the run with his wife in an act of “pure self-preservation”. He had accumulated more than $1.2 billion in debts for the 232-year-old bank – way more than it was worth.

For nearly three years he hid bad trades in a secret error account named 88888, a lucky set of digits in Chinese culture, but not so lucky for investors in Barings, one of whom was Queen Elizabeth II of England, rumoured to have had $62 million banked with them. “People are always going to refer to me as the original rogue trader or the disgraced banker,” says Leeson. Others, such as Kweku Adoboli of UBS and Jerome Kerviel of SocGen may have far eclipsed his losses, but Leeson is still the name most readily associated with massive bank fraud. No one has made a film about Adoboli’s or Kerviel’s actions. On March 2, 1995, Leeson was arrested at Frankfurt airport, having spent time in a luxury Malaysian hotel and in Thailand. Weeks of extradition proceedings followed and he eventually arrived back in Singapore to face the music on November 23 wearing baggy sports gear, a backwards baseball cap and a cocksure smirk.

He pleaded guilty to two counts of deceiving the bank’s auditors and of cheating the Singapore Stock Exchange, earning him a sentence of six-and-a-half years in the high-security Tanah Merah prison. Before his actions caught up with him, life had been good for Leeson in Singapore. Arriving there with his wife in 1992, the plasterer’s son from Watford – a drab town 27 kilometres from London – was very much the cash-splashing banking whizzkid. No escape: Singapore’s high-security Tanah Merah prison “I loved Singapore. It’s a great place to work,” he says. “Obviously there are very strict rules and regulations in every walk of society. But they are clear, they are consistent, they are very obvious to everybody, and if you want to break the rules, you’ll get punished.” Leeson had broken Singapore’s rigid rules even before his spectacular arrest – he was barred from the exclusive Singapore Cricket Club over a racist comment he made and for hitting another member. The impulsive trader also spent a night in the cells after drunkenly dropping his trousers and mooning someone in a bar. But he does admit that working in Singapore gave him the opportunity to make his mark.

“The way I used to look at it was that, in England, I was a small fish in a big pond. As soon as you get out to an expat environment, wherever that may be, you become a big fish in a small pond. You move a lot quicker and, if you’re successful, what you’re doing gets a lot more attention.” Despite the attention, Leeson reportedly kept himself to himself. “Nick didn’t talk to his colleagues much,” a former co-worker told the BBC in 2005. He had a lot to hide. Using Barings’ money, he was betting on the market in a bid to recover the losses hidden in the error account. If he had been successful, it is possible that nobody would know the name Nick Leeson outside the rarefied world of banking. Oddly enough, it was the 1995 Kobe earthquake that cemented Leeson’s fate. He had decided to gamble a chunk of his chips – or rather Barings’ chips – on the Tokyo Stock Exchange, usually a safe bet for traders. But Leeson had not bet on an earthquake striking the mega-city of Kobe and the Nikkei index taking a reactionary tumble.

At the time, he says he had no idea of the impact his actions might have, although he knew what he was doing was “wrong”. Today he worries that bankers are still not aware of what might happen if their actions trigger a financial catastrophe. “I think that’s why you see so many problems in the world of finance these days,” he says. “The consequence isn’t correctly spelled out and everything that has been tried over the past 20 years is not moulding the culture in the way that it should be.” The profit-orientated culture has not changed and is unlikely to change “unless you can actually rip up the rule book and start again”, he adds. “If you’re working within a big bank and you’re making money because you can take advantage of inefficiencies in the system, why would you want to change? If you’re a politician and your party is being largely financed by a huge hedge fund or a very successful financier, why would you have any appetite to change?” Nowadays, Leeson sees himself as someone who is in recovery, much like an alcoholic or a drug addict. He admits to and takes “full responsibility” for his actions.

In his words, he is a “reformed banker” and doesn’t blame other people for what happened to him. He says he can’t ignore what he did either. “As much as I would want to change it, I’ll never get the opportunity, so therefore I have to accept that it’s part of me and make the most of it.” Laughing boy: Leeson arrives in Singapore after extradition from Germany In recent years, Leeson has been making a living in part as an after-dinner speaker, often hired to give talks to audiences of bankers and financiers. He says he is “honest, candid and self-deprecating” in his speeches, but is sure to frame his role in the story as part of a bigger narrative of “negligence and incompetence on a grand scale”. “My incompetence and negligence are very much at the forefront. The regulators, the management and the auditors all played a contributing role and they were all equally incompetent and negligent.” He now sees the human impulse to put on a brave face as entirely natural and is careful not to lecture but, instead, tell his story in order to put over a serious message: “You don’t have to be successful all of the time.

You can learn from other people’s mistakes as well.” Leeson first told his story back in 1996 in his autobiography – also called Rogue Trader – which he wrote while inside Tanah Merah, a prison run on “regimental lines”. He would have had plenty of time to ruminate on his actions. Locked up in a cell for 23 hours a day and with access to only three books a month, he spent a long time imprisoned in his own head. The cells had no beds and prisoners were allocated only one blanket, leaving inmates to choose between using it for warmth or as a pillow. “It’s tough. I imagine that it’s up there with the very toughest of prison regimes that you can be in. But the flip side of that is that it really was quite safe.” But Leeson was not entirely safe. Factors outside of the prison regime’s control were to affect him deeply. At first his wife, who had got a job as an air hostess, visited him regularly. However, the strain of his incarceration eventually became too much for their relationship and they divorced. An even harder blow was being diagnosed with colon cancer. The prison authorities granted him treatment in hospital, but only if he were handcuffed to the bed.

Leeson dug his heels in and refused to be handcuffed. The prison officials backed down. His health problems became so serious that it led to him being released from prison early – after serving four-and-a-half years – to receive treatment, which was successful. After release, Leeson gained a degree in psychology and wrote a book, Back from the Brink: Coping with Stress, that tells his “complete story” interspersed with conversations with a psychologist that compare other people’s experiences with Leeson’s. He settled in Galway, Ireland, the hometown of his second wife Leona, with whom he has three children. In 2006, he became CEO of Galway United FC, a post he held until 2011. Raising his children, giving speeches and taking on consultancy jobs keeps Leeson busy these days, but he does miss the banking industry sometimes, describing it as “the best job you could possibly have”. “I look back on all the things that happened and it was the thing that made me sick, ended up with me being in jail, so I don’t miss it that much,” he says.

“But if my children told me they wanted to go and work at Goldman Sachs or one of the larger banks, I’d be delighted for them. But I’d arm them with the cautionary tale that I learned the hard way.” For an infamous fraudster, Leeson’s regrets seem few. “I regret everything that happened while I was in Singapore,” he says. “But regret is a negative thing… You’ve got to play the cards you’re dealt, not the cards you thought you should have been given.” Rogue Traders – 3 Lessons Learned from Infamous Trading Losses in On The Job If you're new here, you may want to subscribe to get free updates & weekly tips . Thanks for visiting! Trading can be a very profitable and lucrative business. It can also bring billions in losses when it's not properly monitored. If you are looking to become a big shot trader one day, then it's important that you understand one very important type of trader: The Rogue Trader. The Rogue Trader is the epitome of everything that can go wrong with trading, extending from huge losses to even jail time.

We begin our cautionary tale by examining three of the most infamous rogue traders of all-time: Nick Leeson, Jerome Kerviel, and Kweku Adoboli. Afterward, we take away three key lessons that you can use to make sure your trading career doesn't end up with your name next to Nick Leeson's. Going rogue starts now … Bankrupt a Bank, Get Ewan McGregor to Play You in a Movie? Nick Leeson's career began without a university degree in small roles at a private bank, Morgan Stanley, and then eventually Barings Bank. At the time, Barings was the UK's oldest investment bank having been founded in 1762. Through some feat of astounding career progression, Nick Leeson was able to convince Barings to send him to Singapore to startup the bank's trading operations on the Singapore International Monetary Exchange (SIMEX) at the tender young age of 25. Nick Leeson quickly started making unauthorized speculative trades to try to drive his P&L. At first he was lucky enough to generate some decent gains. Unfortunately, his luck quickly headed south as he started accumulated losses. Instead of facing the music on his losses, though, Mr.

Leeson used one of Barings' error accounts to hide his losses. Since Barings allowed him to trade and settle his trades, there was no one around to see the losses. By the end of 1994 Leeson had racked up than ₤200M in losses. Nick Leeson's position was precarious, at best, and things were about to get worse. On January 16, 1995, Leeson placed a short straddle bet on the Singapore and Tokyo stock exchanges. He was effectively betting that the markets wouldn't make a big move up or down overnight. In an example of perhaps the worst trading luck ever, the Kobe earthquake hit early the next morning and sent stocks into a nose dive. Nick Leeson got his face ripped off by tempting fate and Mother Nature. Over the next few weeks, Leeson placed even riskier bets hoping to recoup his losses. Unfortunately, nothing worked and Leeson fled Singapore after amounting losses totaling ₤827M ($1.4 billion!). This was twice the amount of trading capital that Barings had for the entire company!

It was quickly discovered that the losses were too much for Barings to handle, so the entire company entered bankruptcy because of one trader's losses. A 232 year old bank was brought down by a 27-year-old trader. After bouncing from Malaysia to Thailand to Germany, Nick Leeson was eventually arrested and extradited back to Singapore where he would be sentenced to prison for 6 years after pleading guilty to what basically amounted to fraud (for intentionally hiding the losses). Of course, like many other infamous criminals in the history books, Leeson was able to parlay his new-found infamy into an autobiography that he wrote while in prison. In 1999, the book was even made into a movie starring Ewan McGregor and Anna Friel called Rogue Trader . Not bad for a guy who lost $1.4 billion. L'engrenage: The Downward Spiral It has always been difficult for back-office staff to make the leap to the front office . Unfortunately, Jerome Kerviel might have made it even harder for every back office employee after him to make the leap. Kerviel went to a non-target school where he received a Master of Finance in organization and control of financial markets.

It's effectively a program that prepares students for back office roles at financial institutions, which is exactly what Kerviel did in 2000 when he joined Societe Generale (SocGen) in the compliance department. Five years later, Kerviel made the jump to trading when he was promoted to the Delta One desk. The Delta One desk sounds exotic, but it actually makes rather vanilla trades in complex securities. These traders are supposed to be picking up singles and doubles instead of swinging for the fences. Apparently the low risk trades on the Delta One desk weren't enough for Kerviel. He began making unauthorized trades and covered them up with fake, offsetting trades thanks to his back office knowledge. The trades kept ballooning until, according to SocGen, they had totaled €49.9B in exposure … or more than SocGen's entire market cap! When SocGen discovered the unauthorized trades, they closed out the trades for an estimated loss of €4.9 billion ($7 billion). Kerviel claims SocGen knew about his trades, but he was nevertheless charged and convicted of “abuse of confidence and illegal access to computers” and ordered to repay the billions he lost. Good luck collecting that money, SocGen.

Delta One Strikes Again Kweku Adoboli was born in Ghana but moved to the UK at the age of 11 where he excelled at school. After graduating university, Adoboli spent three years working as a trade support analyst before joining the Delta One desk where he specialized in ETFs. Just as with Kerviel, Adoboli started taking bigger and bigger speculative bets in what is supposed to be a rather low-risk trading group, not a high-risk prop trading desk . And, just like Kerviel, Adoboli started using fictitious trades (forward-settling ETF positions) to hide his trades. Once again, fictitious trades were used to offset real trades in order to fool the risk management systems that are designed to prevent such losses from occurring. The damage wrought by Adoboli resulted in $2.3 billion in trading losses as well as the resignation of UBS’s CEO. Once UBS finally got around to discovering a trader lost them $2.3 billion (apparently thanks in part to the Swiss National Bank devaluing the Swiss franc, which blew up Adoboli's trades), Adoboli posted on his Facebook one simple plea: “I need a miracle.” Unfortunately for Mr.

Adoboli, there was no miracle that came to knock on his door, instead it was the London police. Delta One strikes again. Do risk management systems ever learn? Oh yeah, and did I mention Adoboli’s law firm? Kingsley Napley – the law firm that advised Nick Leeson. And now we’ve come full circle … What Does this All Mean for You? Now that we have some background on some infamous rogue traders, you’re probably wondering what this all means for you. The obvious lesson is “don't make unauthorized trades,” but there is more. Here are some lessons that you can take away to help your career: Always Remember there’s a Thin Line Between Saturday Night and Sunday Morning The cutthroat world of Wall Street rewards aggressive behavior. Outperformers win. Anyone who tells you otherwise is an underperformer and they can’t admit it. However, there’s a thin line between being aggressive and being unethical. Unless you are independently wealthy and make a living purely from managing your own money, you are trusted with managing OPM – Other People’s Money. Trust is what makes Wall Street work.

Bear Stearns failed in part because hedge funds started pulling business and fellow banks refused to lend credit in light of Bear Stearns' subprime exposure. Trust in Bear Stearns was lost and the bank quickly ceased to exist as a result. In interviews , you need to portray yourself as someone who is a go-getter that who can also be trusted. If you come off as a sleazy, aggressive-type, don’t expect to be hired for your good looks. Accept Failure in Order to Survive If these rogue traders had simply raised their hand and admitted their first few losses, all three would have probably received a measly slap on the wrist. Instead, they covered up and proceeded to turn a slap on the wrist into criminal charges. Whether you are a trader or a buy side analyst, trades and investment recommendations will go against you. You can build the greatest, most sophisticated financial model ever that tells you to buy stock XYZ and that trade can still go against you. Shit happens. No one is perfect. Investment losses happen … a lot . You goal is to be a bit like a casino – the odds are tilted just slightly in the house’s favor which turns into a massive advantage over the long run.

If you want to enjoy a long career, not a short one that ends in prison, learn to accept losses and move on. Resilient investors and traders succeed in the long-run. Tell the Truth … Always Tell me if this sounds familiar: You have a gap in your résumé that you’d rather not talk about. There’s a low GPA, a gap in your employment history, a lack of experience, etc. It’s tempting to try to take normal resume embellishment a little further and fib the truth just a little to fill in the gap. Don’t do it. Remember how the world of finance is based on trust? Don’t start off your career by immediately losing it. Employers will check into your credentials. Would you rather be the person with lacking credentials or the one who lies about their credentials? Through hard work and networking , the first person can find a job somewhere. The second person will never be hired anywhere. And finally, don't make unauthorized trades. Did I say that already? Alpha or fraud – it's your choice.

Question: What was the name of the bank that rogue trader Nick Leeson worked for?
Answer: Barings